forbearance-agreement

Forbearance Agreement

2 signers
1Lender
2Borrower
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Forbearance Agreement

Through a forbearance agreement, a lender agrees to reduce or suspend mortgage payments for a while and provides short-term relief for borrowers. After having this agreement, during the forbearance period, the servicer won’t initiate a foreclosure.

Forbearance Agreement

Why is a Forbearance Agreement important?

Although this agreement is primarily used for student loans and mortgages, however forbearance is an option for any kind of loan. It gives the debtor extra time to repay what they owe. Also, it helps struggling borrowers and benefits the lender, who frequently loses money on foreclosures and defaults after paying the fees.

When Do you Need A Forbearance Agreement?

In this agreement, a lender agrees not to exercise its legal right to foreclose on a mortgage, and the borrower agrees to a mortgage plan that will—over a certain time period—bring the borrower current on their payments.
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If a borrower confirms he / she can't repay the loan

And all talks end without any result, in that case there’s no other way than creating a Forbearance Agreement.

commission agreement template

A borrower has asked for a forbearance

If a borrower has requested forbearance from the lender, then they have no other way than to go for an agreement. Of course, that should be done after all talks fail.

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Setting terms

Being a lender, if you want to set out the terms of the forbearance period. Make sure to talk to the other party and make a verbal agreement first.

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Use a template for faster processing

Creating an agreement can be tricky, and a template can help you get the most crucial job done in a jiffy.

FAQ About Our Forbearance Agreement Template

A forbearance agreement is different from a loan modification agreement. A loan modification agreement is done when a borrower is unable to pay their monthly installment due to a change in ROI or other aspect of the loan, not due to a financial hardship that may be a short-term problem for the borrower.

One of the biggest disadvantages is that you’ll still owe the payments due. This agreement doesn’t erase your obligation to pay your mortgage loan. You have to pay more money later to make up for missed payments.

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